Despite bankruptcy being one of the best methods of legally getting rid of unsecured debts, it is often misunderstood. People look down upon the very idea of filing for bankruptcy due to the unnecessary social stigma attached to it. There are numerous instances of business organizations and personal finances crumbling to eventually end up in financial ruins. According to Los Angeles based bankruptcy law firm https://bankruptcy.recoverylawgroup.com/, people are unaware of of the various misconceptions existing about bankruptcy. If you are undergoing extreme financial stress should consult expert bankruptcy lawyers at 888-297-6023 to clear your doubts regarding misconceptions associated with bankruptcy.
- Large debts result in bankruptcy
The bad financial situation is something nobody can avoid even after carefully planning your expenses. People often save for a rainy day, however, sudden loss of job or a big medical expenditure accompanied with the home, car and other loans can throw anyone off gear. Filing for bankruptcy in such a situation can help an individual, family or business owner get rid of a huge amount of debt.
- Filing for bankruptcy ruins your chances of getting credit
When you file for bankruptcy, it appears on your credit report, with your score going down by 130 -150 points on an average. This may sound very dramatic and drastic and initially it is daunting, but in the long run, things don’t end up as bad as they seem. The bankruptcy is removed from your credit history after 7-10 years in the case of Chapter 7. While if you make efforts to improve your credit rating by living within a fixed budget, making regular and timely payments, you might even get a loan in a couple of years.
- You end up losing everything in bankruptcy
One of the worst fear people have is that filing for bankruptcy will result in them losing all their assets. however, nothing could be far from the truth. Federal and state exemptions are available which help protect a bankruptcy filer’s assets. You can protect up to specified equity of property including your home, car, jewelry, personal property, retirement and pension funds, etc. Basically, bankruptcy provides you with provisions essential to continue your life after the entire case is discharged. In the case of Chapter 7 bankruptcy, many time clients end up keeping all their assets while getting their unsecured nonpriority debt like personal loan, credit card bills, etc. discharged!
- All your debts are wiped away with bankruptcy
If you think that filing for bankruptcy will magically make all your debts disappear, you have been living under the rock. It is important to realize that certain debts (unsecured priority debts) cannot be discharged even after bankruptcy. Secured debts like car loan or mortgages have assets attached to them. If you wish to keep the property, you need to make payments on those debts or the property (car/home) will be repossessed / foreclosed. Some unsecured debts like a student loan, alimony and child support, government taxes, etc. cannot be discharged despite having a collateral. These are unsecured but priority debts which survive bankruptcy.
Having an expert bankruptcy lawyer for your case can, not just clear your doubts but also effectively get rid of your unsecured nonpriority debts so that you can get a fresh financial start.